REMEMBER: YOU HAVE UNTIL DECEMBER 31ST TO TAKE ADVANTAGE OF THIS PRETTY COOL DEAL

I like doing followup Q&As with TIMalert subscribers, DVD students & seminar participants…see recent previous interviews HERE, HERE and HERE, but below is a great one I did with Jay Z, who was #2 on Covestor, but apparently has taken his page down (I’m guessing he got his own hedge fund)

You can see a video of Jay in THIS post, he’s the first video on the page.

1. I teach several different ways to approach penny stock trading, which has worked best for you? Buying pumps, short selling dumps, scalping? Please explain!

The strategy that has worked best for me is buying pumps. I am not necessary always looking for a pump but I come across them a lot. I look for stocks that are up and use tools such as volume and message boards to see what’s getting attention from other traders. When there is a lot of activity in a particular stock it might be a good candidate to go long. I scalp every once in a while but it is not my ideal way to trade. I like to hold out for a bigger gain however I’ve learned to take profits along the way so if a trade that I just entered immediately goes in my favor and I have a nice profit I may take some of it.

2. What obstacles did you have to overcome before you started making some pretty decent money?

The obstacles that I had to overcome before I started making pretty decent money are the same obstacles that I work on every day. My emotions have always been a struggle for me in trading. I try to keep them out of trading as much as I can. Trading is a business. It requires work, discipline, study and probably most importantly watching the market. There is no substitute for being live in the market. The important thing is to be able to watch for your setup and not overtrade. I also had to overcome trying to sell the top. I used to try to squeeze every last penny out of a trade and sometimes I would get caught in a crash and watch all my profits disappear and sometimes turn in to losses.

3. Please explain your biggest success, % or $-wise, in detail, I love hearing about big wins!

My biggest % gain was from a stock that I bought at .10 and sold 8 days later at $3.85. It was a beautiful pump. One of the most manipulated ones and controlled I’ve ever seen. I made $87,000 on that trade. My biggest $ gain was my first trade in 2003. It was a tip from a friend and I made $436,000. Insane. I went all in. I was up $667,000 at one point on paper. My biggest account % gain was in 2006. I started with a $1,000 account in Jan 2006 and by June 2006 I grew my account to $18,700. That proved to me that you don’t need a lot of money to make money in penny stocks. You just need to learn to take profits and cut losses. You need to protect your account and give it the opportunity to grow.

4. Please explain your biggest failure, % or $-wise, in detail, I love hearing about big losses! (best for learning)

My biggest loss and biggest lesson was Armor Electric Inc. (ARME). I lost about $67,000 in that one. It reminds me of CYGT from your book An American Hedge Fund. ARME was a tip from a friend. I started to believe the hype of ARME. I even talked to the CEO and believed his story.

After buying ARME I realized later that I was the person pumping the stock price up by buying the amount of shares that I bought. I bought the top. I quickly turned in to a bag holder. Since I got in from a tip from a friend (never a good idea) I started to justify why I should stay in even when it was going against me. I read all the message boards and made posts myself. I was in agony watching it go down. I went to extremes of buying 100 share lots at the ask to try to keep the price up and sat on the bid at times to help support it. Finally, I couldn’t take the pain anymore and hit the bid until I was completely out. I don’t remember the decline that day but I definitely hurt the price. To my surprise after I was out it kept going down.

One of the things that kept me in the trade for so long (3 months) was that I was afraid that I would sell the bottom and then I would have to watch it go back up. I bought it at $1.50 and sold all out at .64. It eventually ended up in sub penny land. I could have taken a $3,500 loss the next day after I entered that trade but instead I took a $67.000 loss. This taught me a very valuable lesson. No matter how low a stock goes it can always go lower and if it’s a penny stock coming out of a pump it usually goes lower. It also taught me never under any circumstances turn a trade in to an investment. When in doubt get out. Clear your head and wait for another opportunity. Babysitting a stock that has gone against you will destroy your account and your psychology and you will most likely miss other opportunities that may have made you money.

5. What tips do you have for others who want to trade penny stocks?

You need to learn how penny stocks move. I’ve been watching them for 6 years so I have a pretty good idea how they move but I never stop learning and adapting. When your proper setup appears you should be able to believe in yourself and your setup enough to pull the trigger. You give plenty of examples in your DVD packages as to what to look for and how patterns repeat themselves. Keep it simple. I use price and volume. I don’t use anything else on a chart. I use resources including your website, DVDs, as well as other groups you have recommended such as Investors Underground. IL (Nate), Muddy, and Laura are very helpful. The chat they provide, ability to IM them and seminars is a huge tool for me and other traders. It’s rare to pick tops or bottoms of a stock so I don’t try. I take a piece of the action. I get to the party late and I leave early. That’s what builds your account and keeps you in the game. It also keeps your psychology up.

I have watched you lose a few trades in a row and still keep your head up because you believe in yourself, your strategy, and you didn’t try to make all your losses back in one trade. Slow and steady wins the race. Greed and Fear will destroy your trading account and your psychology. If you are going to read one book on trading psychology read Trading in the Zone by Mark Douglas. Learn about position sizing and money management. Exiting a trade is so important that it is probably more important than your entry. You can have a bad entry and still make money or minimize your losses with the right money management. Find what type of trading fits your personality and schedule. Trading can become very addictive and sometimes the fear of missing out can seem worse than the fear of losing money. Don’t get caught up in this. There will always be another trade. A lot of people just want a stock picking service and that’s not the way to go about trading. I recommend a beginner invest in your DVDs and become a subscriber to your alerts and then make trades based on what was learned.

Tags: Interviews, Success Stories, Testimonials, TIMalerts Reviews